Wells Fargo has denied rumors that it sent letters to many California dairymen notifying borrowers they won't receive further financing and must find a new lender or file bankruptcy by February.

The bank also denied rumors that it has targeted six large dairies in Idaho for foreclosure.

"We have not sent a general letter to our dairy customers in California or any other state," said Ken McCorkle, head of Wells Fargo Agriculture Industries Department. "We do write to our customers individually on various matters and conduct at least an annual review of their cash flow and collateral."

The company deals with customers on an individual basis, he said. Wells Fargo has foreclosed on a few dairies.

"The circumstances were unique and were not necessarily driven solely by current dairy economic conditions," he said.

"We continue to provide dairy loans where -- like all loans Wells Fargo funds -- there is adequate cash flow and sufficient capital for the operating risk of the business," he said. "We're working with our current dairy customers and prospective dairy customers as they adjust their strategies to this new economic environment."

News of the rumors showed up in a Downes-O'Neill report in mid-December. Several officials with California and Idaho dairy groups said they heard the rumors but had no firsthand knowledge of the allegations.

"We hear these rumors every day, for the past three years," said Jamie Bledsoe, a Riverdale, Calif., producer and chairman of Western United Dairymen.

He said he does know of a couple of dairymen who were put on six-month extensions with increased payments. And he had talked with some bankers who said they'd be willing to work with clients who were willing to manage their risks differently, as opposed to taking the attitude the hard times were just a result of industry cycles.

He expects financing to continue to tighten, considering dairymen's lost equity and high feed prices.

"We're moving forward with more uncertainty and volatility than we're used to and bankers are used to," he said. "I'm sure there's going to be more bankruptcies, more failures, more quits in the next six months. We can't deal with these feed prices."

With dairy slaughter numbers accelerating since the corn price began its ascent in mid-August, it might already be happening, said Phil Plourd, president of Blimling and Associates, a Wisconsin dairy consultant firm. Weekly slaughter for the last 14 consecutive weeks has been up an average of 10 percent.

"It doesn't strike us as entirely coincidental that since the time corn prices started moving sharply higher we've seen the rate of slaughter pick up," he said.

Anecdotally, his firm is hearing of more auctions and more liquidations, he said.